I wouldn't prefer an all or nothing type toggle. I would prefer to be specific about which month I send income to. This is particularly important if you do Paycheck splits to track various payroll deductions. The deduction expense will be in the current month regardless of which month you send income to.

And why should one-off income events be automagically forced into next month? That $10 birthday check from grandma that comes in once a year doesn't need to wait till next month.

KnitPurlKnit I have a category called "Income for Next Month". All of my paychecks are automatically categorized to that category via scheduled transaction (ie they don't run through TBB). When I am ready to budget for next month (basically when I receive my last paycheck of the month on the 22nd), I change the categories on those transactions from Income for Next Month to Inflow: TBB. That keeps reports clean and holds the money in reserve until I am done budgeting for the month (after years of YNABing, on the 22nd of the month, I'm going to at most be moving stuff from one category to another within the same month, not be creating new categories).

jenmas I tried this using money that came in today. Rather than sending it directly to TBB, I had it categorized as Income for Next Month. Then I  looked at my April budget and it showed the money in the Available Column, but not in the Budgeted Column. Is that the way it's supposed to be? If I do it that, it doesn't show up as income this month in the report. When I move it over to TBB next month, does it then show up as income?

KnitPurlKnit The transaction won't show up as income until you recategorize it as Income: TBB at the time you're ready to budget next month.

KnitPurlKnit The INM category is just a temporary holding place. Like any category, stashing money there shows the balance in the Available column. In order to budget it, you have to take it out of the category. There manner in which you do that should match how it went in:

If you put it in via categorization in the transaction, you should edit the transaction to make it TBB -- typically at the end of the month (or even a few days into the month if you don't get around to it). SfTF is not an issue because th at money is needed "now".

If you put it in via a budget entry, you should take it out with a budget entry. Some will delete the entry at the end of the current month, allowing it to flow forward. Again, at this point this is "now" money, not future money so SFTF isn't a concern.

In either of these approaches, there is a danger with late posting transactions showing up in last month. Be very careful with any adjustments to last months budget -- SFTF is possible.

To absolutely prevent SFTF, budget funds to INM, then negative budget that category *in the new months area* to move them to TBB (or use the Move Money Tool).

Reports are based on the transaction date and category. They are temporarily incorrect if you use the first approach (categorize to INM) but are correct after releasing the funds (editing the transaction).

These variants differ primarily in the amount of manual effort they require. I have quite a few income events, so I use the categorization approach. It also keeps the "Budgeted" header correct (focused on the current month).

None of these approaches is perfect, so pick one to your the least pain for your particular situation.

KnitPurlKnit Another tip - it's very helpful to strive to normalize your budget entries across time. Decouple the demand on your budget from the fluctuations in actual transaction amount. This was nearly as transformational to me as living on last months income.

I budget the monthly average in variable categories (1/12 yearly total, computed near tax day) which builds up a surplus in the low months that is consumed in the high months.

A consistent budget demand allows better planning throughout the budget. I don't have to scramble, cut anything else back, or even think about it at all when I get those huge summer electric bills.

I do this for the various utilities, but also petrol, kids activities, and anything else that may significantly vary over the course of the year.

This is really just applying Rule 2 (True Expenses concept) when you think about it. As is typical, you may have to budget more than "nominal" when starting out, depending on the timing. The simple rule is to budget the average, but cover any eminent overspending once you know the billed amount.

KnitPurlKnit dakinemaui

For some things, I will add about 10% divided over time to help cover any increases in cost or over usage.  That way, if the cost of that category item goes up I'm not left (as) flatfooted.  Any surplus when the bill or purchase comes around will decrease my 1/12th monthly target for the year after.  Taking inflation into account is also important for long term sinking funds as well.  If I'm saving up for new windows, I'd rather have a bit too much saved than have the cost be 15% more than I'd estimated 5 years ago because I used 2014 prices to determine my goal.

Technicolor Cheetah I do that by using running 12 month averages and then bumping them up. After awhile it normalizes but gives you room for inflation.

For expenses that fluctuate seasonally, I calculate my budget amount as the average amount spent in the previous 12 months, and round up to the next $5 increment. Additionally, I have put a cap on the category equal to the 12 month average  + the sum of any amounts during those 12 months above the average. I also round up that total.

The caveat to this is when you are starting in YNAB with these seasonal categories. Gas prices are higher in summer than winter, and often people drive more. If you only have electricity, then you will see highest usage in the coldest and warmest months. But, for example, if you use natural gas for heat but electric cooling, your gas bills will be highest in winter, lowest in summer, and vice versa for electricity. If you start funding in YNAB during a low cycle and budget the average, you will have enough at the peak. But if you start during the peak, you'll need to fund at peak levels and not average levels until usage declines or you won't have enough in the category.

I use a spreadsheet to do the calculation and update monthly when the bill comes in. For gas/electricity, it goes back to when we moved into this house. For car fuel/transit (Mrs. nolesrule often takes the train), I have records going back to when we started using YNAB 5 years ago. It's pretty easy to do in a spreadsheet. You just need the following columns.

A = MM YYYY
B = Actual spent
C = Average of last 12 months = AVERAGE(range B for current cell and previous 11)
D = Budget Amount = CEILING(B thisrow,5) Or use whatever number to round up in the second parameter

E = Category cap
F = Budget month for D and E values =  EOMONTH(A this row, 1) (formatted to MM YYYY)

Category cap is the tough one and I use the following formula

=CEILING(SUMIF(range B for current cell + previous 11 cell,">"&C this row)-(COUNTIF((range B for current cell + previous 11 cell,">"&C this row)-1)*(C this row),5)

What this does is sums up all amounts spent in the last 12 months only in months over the 12-month average and subtracts the 12 month average * number of months above average - 1 (in order to add back in one month's average amount) .... then rounds up to the next $5.

I am considering combining natural gas and electricity because they are cyclically opposite, which would make for one relatively smoother category. It would result in a smaller budgeted amount but a higher cap.

For a percentage, instead of CEILING, you can multiply by 1.x).

nolesrule I look at the cap from a drawdown view. The pessimestic case is if all the "high" months came due in sequence (though perhaps fairly realistic for some utilities). The average is taken care of by the budget entry each month, so the sum of the "overages" across 12 months is the required cap. Evaluate whether a category exceeds its cap after you've paid the current month's bill for simplicity.

For example, my summer water bills typically exceed the average. If those bills are $100, $200, and $50 above the average, the cap is $350. If I'm sniffing around for money to reallocate, anything over $350 is fair game to take from that category.

I believe the final value is equivalent to yours (your "extra" month is handled by checking it after paying the bill), but certainly very similar if not. I don't bother with a spreadsheet, but instead just look at the Expense report, add up all the few "high" months on a calculator, and subtract off the average * the # of high months.

Definitely agree with bumping up the budget entries slightly from the average for inflation or life-style creep.

dakinemaui It's the same math. I just do it for the start of next month rather than the end of this month, so the cap is overage + budget.

I use a spreadsheet because it just means typing in 1 number in a new row and it's all calculated out. I update each month to more accurately account for fluctuations in the underlying rates without having to actually pay attention to them. Right now I just round up the numbers to the next $5 increment, but I might switch to using 5% with a round up factor (I like clean numbers). In that case I'd use  CEILING(Calculated  Amount *  (1 + pct increase),5)

And yes, I know it's what you do. I got the idea from you, and just applied in my own way to match how I want to manage my budget. For capped categories, I like to calculate my start of month with cap. So it keeps it homogeneous with my Monthly Funding to a cap categories . 😉

Cornflower Blue Boa One way to fix that is when your paycheck comes in, categorize it directly as Available Next Month rather than as Inflow:TBB. Then when all the income has come in, change the category to Inflow:TBB. So yes, during the month the header info will be wonky, but once you are ready to budget, it will be more accurate.

jenmas If you go that route, does it mess with other reports?

RIP_MSMoney Nope because I change the category back to Inflow:TBB after all the money has landed. I mean I guess if I looked at October reports today it would be off because my Oct 7 pay is currently categorized as Available Next Month but by the end of the month I'll change it back to Inflow:TBB and there's no real reason to look at the October reports until the end of the month.

jenmas said:
during the month the header info will be wonky

On a pedantic note, I'd make the case the header is actually correct during the month. Prior to release (i.e., recategorization to TBB), Funds for October does not contain the new money that is meant to be used in Nov. The header will be incorrect after the release because then Funds For October will then contain money budgeted in Oct and received in Oct. (The latter, of course, is budgeted in Nov.)

FWIW, I tend to ignore most of the header, paying attention only to TBB & BIF in the current month -- both of which should be $0 unless I've just released next month's money -- and Overspending in next month's area.

dakinemaui I figured out what I think is weird in the header. In September it says Funds for September = X. X is equal to Budgeted in September plus Budgeted in Future (ie October). Also X is equal to about twice my take home pay (which makes sense because the funds budgeted in Sep plus funds budgeted in Oct). So right now Funds for Oct is equal to what the Sept header says for BIF. And when I get paid on the 22nd and budget for November, the Funds for Oct will shoot up. So it's really just a useless number that I ignore.

jenmas Right. Funds For <month> is correct during most of that month. After transactions get into TBB, FFM will be forever... wonky. 😋 An inescapable consequence of the flow-forward logic.

Odd thought: what is the noun form of something that you ignore? It's not "ignorance", but that's all I can come up with off the top of my head! WordTenor thoughts?

Steel Blue Dragon I only ever used the current YNAB, so had the advantage of not knowing any different, and learning about a holding category together with getting to know the YNAB rules and system.

But maybe it can still be of some help knowing that using this months income for next month is just a routine, like all else you do in YNAB.

I understand from long time users it used to be different. And I think I myself would have a hard time switching from a previously paid for program to a subscribtion if it forced me to change my routines. So I praise myself lucky I came after that, am just only very happy I found YNAB and didn’t have to get over the bump of change.

If you do get used to a new routine with a holding category: it really is a wonderfull program! The app helps a lot as well! Good luck.

Steel Blue Dragon I'm working through my first full month on YNAB online after using YNAB4 for years!  Overall I like the convenience and ease of importing transactions.  One of the new routines proposed was to create a category for income fo next month and then do some recatagorization at each. month cross over.  So far I'm feeling good with this though I have a little over a week to go before I practice this some more.  

I didn't want to jump to subscription either, but now that I am here, so far I am happy.  

Powder Blue Pony Salmon Colt   Thanks for your feedback folks.  Much appreciated.  I've seen the workaround and I'll give it a go!  

Salmon Colt I used a holding category for money to use next month. I kept an anxious eye on the total in there, never quite sure if it would get to the right number.

Then I tried budgeting in the next month instead, just to see how that worked for me.

Once I had sorted my rules I have found it much much better to budget in the next month.

My rules are: 1) once this month is budgeted it get no more income into it. None. All adjustment/WAMMing has to be between categories.  2) ALL income goes into next month.

As money comes in I start budgeting categories from the top down in the next month. I order my categories to make this sensible. Most important at the top.

What makes this good for me, living on a very tight budget, is that I know how far down next month is funded and how much isn't, so this keeps me very mindful of how I spend this month.  It also reminds me what is important to me -- what I budget first etc, and keeps me aware of the things that only get $ if there are $ left over.

So I changed from a process where I had an underground anxiety ( will I have enough for next month?) to one where I knew exactly what I had and needed for next month. I had not been aware how much anxiety that was causing me until I tried the other method.  But I had also got a month ahead a couple of times and then lost my month ahead,  by putting new money into the current month. It s very hard to get that month head money again.

Its not truly logical -- I could be worrying about having enough to fill the categories next month in the same way I worried about would there be enough to budget the whole month out. Sometimes you just have to try things and see how you feel, and do what feels best.

If your income is comfortably more than your every-month expenses, this is all less of an issue. But when its all very tight it can make a big difference.

Cirrus I recognize that! For me there is a difference in anxiety because keeping ALL of this months income for next month gives clarity. That's just how much there is. No more. Same for this month: just what I budgetted. If things change I will take it from an other category. No need to worry about things that are cristal clear.

When I take a little from income when it comes in I worry if there will be enough for next month. 

Thanks for putting it into words! The recognision made me realize I really should stick to this routine! 

Powder Blue Pony PM: I do use the holding category but need the rules about not touching this months income just like you. 

nolesrule Sure it is.  You may not like the implementation but it is definitely possible to do the workflow you are suggesting.  To suggest it isn’t is disingenuous. 

briefcase please explain how to accomplish this that does not involve flipping screens frequently to check future TBB balances.

I grow weary of the apologist stance on this issue. It's been 4 years and not fixed. 

nolesrule First, you didn’t apply any caveats to your statement.  Second, no one cares what you’re growing weary of.  The rest of us are growing weary of the ninja posts everytime this comes up. 
 

The point is that your workflow is possible in the software despite your assertion that it isn’t. 

briefcase Since you didn't answer my question, I'll assume you don't actually have an answer.

Read the post of the person I was responding to you if you need the full context. I wasn't going to quote the entire thing. The person's plan included budgeting directly into the next month, and ignored the effects of Stealing From the Future.

SFTF is a real thing, and it affects people every single day. There are more places where YNAB is discussed than here on the support forums, and I'm having to explain it to people who have run into it in their own budgets (and not just as a theory) at least 2-3 times a week.

So if I continue to bring it up, it's because it's a bug that still needs to be fixed. I'm trying to help people from making this mistake and costing them real money. People who try to shut me up are just part of the coverup and ignoring the fact that there can be real consequences.

nolesrule LOL coverup.  That's right, there's a giant conspiracy involving SFTF and you're the voice in the wilderness.

briefcase As long as new users continue to have issues with this design flaw, people who can empathize with them can advocate for an improved product.

dakinemaui Sorry, but being empathetic does not involve being belligerent, so no I do not agree that what noelsrule is doing is constructive.

briefcase They were handed a viable solution years ago and for some reason have chosen not to implement it. Heck, they even could have implemented the Toolkit's warning, which probably is an even simpler update. But they didn't.

This has gone beyond negligence, and they need to be reminded that a change is necessary.

And when someone recommends budgeting directly into a future month, the reason I counter that is precisely because I still encounter people scratching their heads about Stealing From the Future after it has already bitten them. People who recommend budgeting directly in the future either know how to watch out for it or aren't aware of it. If they don't mention it when recommending budgeting into future months directly, it implies they aren't even aware of the issue.

The fact that we still have to explain this bad UI experience to new users on a weekly basis 4+ years after launch makes me angry because it's dangerous. It should make everyone angry. Why doesn't it make you angry?

nolesrule 

1.  Because I have better things to be angry about
2.  Because it's in their documentation, help videos, live classes, and so on and so on
3.  Because I don't work for YNAB support and neither do you
4.  Because I have better things to do than make myself the center of attention on the YNAB forums
5.  Because I have been using the software 100% since launch in 2016 and have never once been negatively impacted by this in such a way that it wasn't obvious what was going on and how to fix it
6.  Because I understand the basics of cause and effect

I recommend budgeting into future months, and the fact that I don't mention this absolutely does not imply that I'm not aware of it.  I use the software how the documentation says to, and so far it's working pretty great.  I used YNAB4 the way the documentation said to, and it was pretty great, too, but its time has gone.

briefcase Got it. It's the old "it's not a problem for me, so it's not a problem" line. Since it's not a problem for you, perhaps you should move along and stop criticizing me for actually trying to help people.

nolesrule It's pretty short sighted to ask me why I am personally not angry about the issue and then say that as a response when my answer is personal in nature.

nolesrule Also,  no, you are not helping people, you are insisting that your personal view of the product is the correct one, and that's way more dangerous than SFTF will ever be.  I don't believe you to be a helpful person based on your past comments and behavior on the forums, this one and the old one.

🍿

bret Yes, I think when money is not tight everything changes. Most months I am not able to fund all my categories. I keep those rarely-funded categories there for the times when a bit of extra work brings in some extra money, and because its really helpful to know exactly what I *can't * afford as well as what I can.

I do think there is a major difference in budgeting when money is tight and when it isn't, and that the  4 rules impact differently. For me, with 'real' scarcity, the prioritising that happens when I have to WAM really does good work in my head to help me sort what is truly important. But if I could fund all categories for this month, next month and several more (if I had a mind to) no prioritising is necessary. Make a new category stick some money to it and and then think about what to do with the rest of the $. Artificial scarcity needs a really good and big life goal to make good sense and provide motivation. I suspect there might by a better tool than ynab needed for that, though clearly Jesse doesn't think so, or hasn't thought so yet.

Cirrus I dunno, I think there will always be a need for prioritizing unless you're a multi-millionaire or billionaire without the taste of someone of that net worth.

kevinf Which bank do you use for that 3% yield checking?

kevinf A money market fund really isn't investing. It's basically a non-FDIC insured bank account.

I keep some of my money parked in Vanguard's settlement fund and use it like a bank account. It has some advantages in that it's partially not taxable by the state.

You need to look at your after tax yield or tax equivelant yield to determine the "best" savings vehicle.

kevinf 

Thanks for the info! I'm certainly not an expert on these matters, but it doesn't seem like that Vanguard t-bill fund has performed much better than my Ally savings account over the past 5 years. Maybe the differences are more apparent in times when the federal fund rate isn't so low.

you may be able to create a secondary deposit account with your bank that you can transfer overflow to and mark that account as off-budget to keep you TBB/e-fund within reason

I already keep the lion share of my cash in interest-yielding savings accounts. But I do prefer to keep that money on-budget. It doesn't bother me to have a big fat "Income Replacement" category in my budget that I almost never touch. It's just an explicit reminder that the money in my savings account has a very specific job (to provide financial security against the possibility of job loss) and shouldn't be spent on other things.

Getting a little off topic here, but there are lots of other discussions on these support forums about the merits of managing savings on-budget.

kevinf It’s interesting you think that three months expenses don’t belong in the budget but would be willing to fund an account with relatively low yield with $50K, which is well above three months’ expenses for most people. Three months expenses for me is less than a third of that amount, and I wouldn’t want much more than that parked in something that is tied to something as slow growing as TBills. 

Yes, beyond a certain point, excess money should be invested. But most Americans should have much more reserve liquidity than they actually do. And if they are YNABers, that reserve liquidity belongs in the budget.

gte037p The sport of nYNAB kvetching is venerated, exciting, and quite fun. 

WordTenor Ha ha ha!!!

I never used YNAB4, but nYNAB is a lot better than the version I used back in 2011.  Except I have to pay annually.  That's annoying, but it's the standard these days.  I wish I had YNAB4 or I would probably just keep using it until I can't anymore, but I guess moving to nYNAB and then complaining about it is even more fun :P

kevinf 

kevinf said:
I have to disagree that a money market fund is not investing; a 'standard' checking account yields 0.05% interest, with the Federal Money Market currently paying 1.55% which is 31x more return. A high-yield bank account is a different beast and typically has both minimum and maximum deposit amounts that earn that yield, along with monthly transaction requirements to earn the yield on the money that fits in the min/max of the account.

Why are you comparing it to a checking account? The comparison should be to a High Yield Savings account.... which in my extensive experience has no minimum or maximum deposit amounts and no transaction requirements. Not sure what banks you are using.

Money market funds and savings accounts serve the same purpose.... so pick what best fits your scenario based on your circumstances. The TEY for VMFXX for me living in NC is 1.595% (SEC Yield is 1.51%) compared to my savings account at Capital One at 1.7%. Most of my savings is in the Capital One account. (For other comparison, VUSXX also has a lower TEY for me than my savings account).

Personally I do not consider anything that does not put principal at risk to be an investment.

Most of us only keep what we need in checking and put the rest in higher interest vehicles, but that's not the same as putting your principal at risk.

kevinf The current rate on my savings account is 1.7% (same one as @nolesrule) and that's not even the highest rate available out there; I just can't be bothered to move the money in hunt of a couple more bucks a year. 

As said above, "investments" are typically defined by pretty much anyone in the personal finance world as being something which has the risk of losing principal. The lack of risk is exactly why the yield is so low on savings and MMDAs. You're welcome to use words the way you want, but using them in the most common way they're used will aid in communication with others. 

kevinf said:
Anything past 6 months of cash on hand for emergency funding seems like money that should be invested in some manner.

 Absolutely agreed, which is why it is important to distinguish between an investment and a money market account the yield of which is actually low for the current market. 

+1. "Investment" mandates risk v. reward tradeoffs. With zero risk, it's just common sense to maximize interest subject to the effort required.

nolesrule Actually one of the things I remember from the 2008 global financial meltdown is that some money market funds lost money some day.  Not a lot, but it was a huge deal because they are supposed to always keep the balance.  An FDIC insured bank account is as reliable as the FDIC insurance, whatever you think about that.

PhysicsGal You are right. That is actually true.

However Vanguard's MMFs did not, and it's because they are more conservative with them, while at the same time being better at managing them... so they are safer than most MMFs while also having a higher yield.

I'm actually a fan of vanguard's MMFs and I do use them (I'm a fan of Vanguard in general), but they aren't even incrementally better than a Capital One savings account right now.

nolesrule I'm a huge fan on Vanguard too.  I read lots about investing only to actually invest all of my retirement money into a Vanguard Target retirement fund.

PhysicsGal Those are great products and you couldn't do better in an all-in-one solution but I like having more control over my glide path.

Agree with Superbone . Vanguard TDFs are great.

I don't use them personally for greater control, not just over glidepath, but over the tax efficiency of our portfolio. We've been growing our taxable account, and in my tax bracket it really doesn't make sense to hold muni bonds nor taxable bonds due to a combination of yield and tax efficiency issues, so I hold tax efficient stock index funds in our taxable account and hold all our bonds in our tax-deferred accounts.

kevinf Yes, bonds and equities are part of an overall plan. Most people shouldn't be investing their emergency fund or near-term spending dollars due to the risk of principal loss unless they have the ability to take on that risk (part of the whole "need, ability, and willingness" thing).

If you don't already have excess cash beyond the needs of your budget that you can invest to build up that investment balance, then you don't have the ability to invest.